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S.Lanka shares rise on improved foreign buying

COLOMBO, July 31 (Reuters) - Sri Lankan stocks .CSE rose on Friday as investor confidence picked up on improved net foreign buying after a $2.6 billion loan from IMF despite some top listed firms posting poor earnings.

The all-share index closed 0.55 percent or 13.85 points up at 2,525.70. It hit a near 14-month closing high on Monday.

“Retail investor trading picked up on select bluechips,” said Harsha Fernando, CEO at SC Securities. “We believe the market to pick up further next week on increasing foreign buying.”

Foreign funds sold 35.7 million rupees of shares on Friday and bought 137 million rupees of mainly banking, finance and insurance sector shares, leading to a net inflow of 101.3 million rupees, bourse data showed.

Analysts say foreigners are still waiting for a clear direction on exchange rate stability after the IMF loan and steps by the government to maintain a 7 percent fiscal deficit in 2009 as agreed with the IMF.

IMF approved the loan last week to help the country weather the global financial crisis and build up its low reserves, while rebuilding the north after a searing 25-year civil war.

Conglomerate Bukit Darah BUKI.CM jumped 10.4 percent to 1,216.50 rupees a share, calculated on a weighted average, while country's No. 1 mobile phone operator, Dialog Telekom DIAL.CM, closed 4.35 percent firmer at 6 rupees. Top conglomerate John Keells Holdings JKH.CM, which posted a 22 percent drop in its net profit for the first quarter ended June 30, fell 1.63 percent to 135.75 rupees. [ID:nCOL428071]

Development lender DFCC Bank DFCC.CM closed flat at 140.75 rupees after a 6.9 percent drop in quarterly profit on Friday. [ID:nCOL386070]

The total turnover was at 469.4 million rupees ($4.08 million), more than the 2008 daily average of 464 million rupees. The bourse is up 68 percent in 2009 and 32.4 percent higher since the government declared victory in the war on May 18.

The rupee LKR= ended flat at 114.90/95 a dollar as a state bank, which the central bank uses to direct the market, bought the dollar at 114.90.

Nandalal Weerasinghe, the chief economist at the central bank, on Wednesday said the bank does not want the rupee to appreciate from the current level ‘right now’.

Sri Lanka’s consumer prices rose 1.1 percent in July from a year earlier, up slightly from a record low of 0.9 percent in June, government data showed on Friday. [ID:nCOL528987]

Sri Lanka is considering a $500 million sovereign bond issue among possible fundraising options and expects to make a decision in the next few weeks, central bank governor Ajith Nivard Cabraal said on Friday. [ID:nSP417837]

Global investors have told Sri Lanka they would prefer the government to issue a 10-year bond if it decides to tap the international capital markets, the central bank said on Wednesday. [ID:nCOL482783]

The interbank lending rate or call money rate CLIBOR edged down to 9.401 percent from Thursday's 9.495 percent.

For secondary market rates, please see <0#LKBMK=>. ($1=114.925 Sri Lankan Rupee)